News Feature | October 18, 2013

Overstock.com's Club O Rewards Helps Revenue Soar

New Pennsylvania warehouse also helps online retailer in quickening order fulfillment

Online retailer Overstock.com has to be smiling ear-to-ear as the company’s third-quarter earnings reports shows big profits. Fueling these figures were the company’s low prices, increased order sizes, and what it is calling the best rewards program on the Internet.

For the quarter ending Sept 30, Cottonwood Heights, UT-based Overstock.com saw revenue jump 18 percent, to $301.4 million from $255.4 million a year ago. Net income for Overstock also saw big gains, jumping up 31 percent to $3.5 million against 2012’s total of 2.7 million. The company’s diluted earnings per share also increased, bumping up three cents from last year, up to 14 cents per share, which marks a 27 percent increase.

The company’s growth in revenue is primarily attributed to increased order size. Overstock.com says order size increased 16 percent from last year, with the average order totaling $170, where in 2012 the average order was valued at $147. Increased order size is not the only thing fueling revenue growth. The company states that the volume of orders has increased two percent over the last year.

Overstock.com also says members of its rewards program, Club O, have amplified their spending. “Our Club O customers are rewarding us with their business,” says Overstock.com’s chairman and CEO Patrick Byrne. “In Club O, we built what we believe is the best, most generous loyalty program on the Internet, with free shipping, 5 to 25 percent rewards on products, and books priced at Amazon prices but with 15 percent rewards, all for $19.95 per year,”

The online retailer may also be mimicking a thing or two from the playbooks of retailers like Amazon, Macy’s, and Walmart. Fulfilling orders as quickly as possible has always been a key of online retailing, but now the stakes have never been higher as retailers are aiming for same day delivery. Amazon has laid its fulfillment plans out, Macy’s is using its physical stores as fulfillment and distribution centers, and Walmart has built two new enormous distribution centers to more quickly fill orders. Overstock has opened new fulfillment warehouse in Jonestown, PA. The addition of this center — the primary fulfillment center is located in Salt Lake City — will allow Overstock.com to fulfill orders for its east coast customers in two days or less. “We are focused on the quick and efficient delivery of products to our customers at the best prices possible,” say Byrne. “With the addition of this new Jonestown warehouse, Overstock.com can now provide even faster delivery to our eastern United States customers.”